California Autos Examiner

Wednesday, December 26, 2007

I'll give you a hint, it's not a magic pill! I'm talking about the new found strength of Shanghai Automotive.

Shanghai Automotive, parent of SAIC Motor Corp., will take over the key assets of Yuejin Motor Group, which owns, Nanjing Automobile (Group) Corp., in a deal valued at about $286 million, the two companies announced Wednesday. The merger will enable SAIC to compete against multinational auto makers more effectively.

Nanjing was working on the relaunch of the MG brand, including manufacturing some MG's in Oklahoma. In all of the articles I scanned today, I could not find any information about SAIC's plans for the MG brand. However, I know that Nanjing's partner, Fiat, was worried that the MG venture was distracting Nanjing from its other commitments. Fiat has announced that as part of the SAIC/Nanjing tie up, it will sell its stake in the 50-50 manufacturing joint venture it had with Nanjing. As for Nanjing's plans for an Oklahoma MG plant? From what I've read, relations between American investors and Nanjing were already strained, so the merger might finish things off.

Both SAIC and Nanjing Automobile were set to manufacture their own versions of the Rover 75 sedan. Undoubtedly, those two copies of the 75 will be combined into one version, which makes more sense for everybody.

The Chinese government encouraging more of its auto manufacturers to merge, creating a healthy stable of three or four automotive groups which would be capable of competing on a global level.